AIDA Europe Research Series on Insurance Law and Regulation

Volume 4

Series Editor Pierpaolo Marano, Catholic University of the Sacred Heart, Milano, Italy Editorial Board Members Juan Bataller Grau, Polytechnic University of Valencia, Valencia, Spain Johnny Chang, National Chengchi University, Taipei, Taiwan Christos S Chrissanthis, University of Athens, Athens, Greece Herman Cousy, KU Leuven, Leuven, Belgium Simon Grima , University of Malta, Msida, Malta Ozlem Gurses, King’s College London, London, UK Helmut Heiss, University of Zurich, Zurich, Switzerland Peter Kochenburger, University of Connecticut, Hartford, CT, USA Tadao Koezuka, Kagawa University, Takamatsu, Japan Jérôme Kullmann, Paris Dauphine University, Paris, France Birgit Kursche, University of Pretoria, Pretoria, South Africa W. Jean J. Kwon, St. John’s University, New York, NY, USA Sara Landini, University of Florence, Florence, Italy Margarida Lima Rego , NOVA University Lisbon, Lisbon, Portugal JJ Lin, National Chengchi University, Taipei, Taiwan Katarzyna Malinowska, Kozminski University, Warsaw, Poland Leo P. Martinez, University of California - Hastings, San Francisco, CA, USA Patricia McCoy, Boston College, Newton, MA, USA Gary Meggit, University of Hong Kong, Hong Kong, Hong Kong Robert Merkin, University of Exeter, Exeter, UK Daleen Millard, University of Johannesburg, Johannesburg, South Africa Satoshi Nakaide, Waseda University, Tokyo, Japan Jaana Norio, University of Helsinki, Helsinki, Finland Kyriaki Noussia , University of Exeter, Exeter, UK Laura Núñez, IE Business School, Madrid, Spain Stefan Perner, University of Linz, Linz, Austria Ioannis Rokas, Athens University of Economics and Business, Athens, Greece Michele Siri, University of Genoa, Genoa, Italy Caroline Van Schoubroeck, KU Leuven, Leuven, The Netherlands Wouter Verheyen, University of Antwerp, Antwerp, Belgium Manfred Wandt, Goethe University Frankfurt, Frankfurt am Main, Germany Hsin-Chun Wang, National Taiwan University, Taipei, Taiwan Ecehan Yeşilova Aras, Izmir Democracy University, Izmir, Turkey Ling Zhu, Hong Kong Polytechnic University, Hong Kong, Hong Kong

The AIDA Europe Research Series on Insurance Law and Regulation is the first book series of its kind and area of specialization. It comprises volumes on topics researched and written with an international, comparative or European perspective. The regulatory response to the financial crisis in 2008 has pushed towards the adoption of transnational principles and rules also in the field of insurance by encouraging the convergence of national regulations to common regulatory frame- work. The need for a common legal language emerges to fully understand the process of transnational convergence in place and its impact on national legislation. On the other hand, persisting national peculiarities must be examined in the light of the transnational convergence of rules and concepts. Moreover, new risks, business practices and customers’ issues are emerging worldwide, so requiring increasingly global responses. The scope of the series is to bring together academics, practitioners and policy makers in order to exchange views and approaches to the topics concerned, which are based on the new transnational dimension of insurance law, business and regulation. All contributions are peer reviewed.

More information about this series at http://www.springer.com/series/16331 Pierpaolo Marano • Kyriaki Noussia Editors

Transparency in Insurance Regulation and Supervisory Law A Comparative Analysis Editors Pierpaolo Marano Kyriaki Noussia Department of Legal Studies School of Law Catholic University of the Sacred Heart University of Exeter Milan, Italy Exeter, United Kingdom

ISSN 2662-1770 ISSN 2662-1789 (electronic) AIDA Europe Research Series on Insurance Law and Regulation ISBN 978-3-030-63620-3 ISBN 978-3-030-63621-0 (eBook) https://doi.org/10.1007/978-3-030-63621-0

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Foreword

Transparency is a fundamental principle which transcends the entire financial sector. It constitutes a priority of the Financial Stability Board, primarily because it rein- forces investors’ confidence in the market. In (re)insurance undertakings, transpar- ency is expressed among others through reporting obligations which in the EU compose one of the three pillars of the Solvency II system. The (re)insurance company shall report, inter alia, information on its financial standing, its organiza- tional structure, the external auditor, qualifying holdings, any significant activity or events which occurred during the reporting period, information on the remuneration policy for directors, significant transactions with shareholders, persons with signif- icant influence on the undertaking and on members of the management, as well as data on any complaints or penalties imposed on the undertaking by insurance supervisory authorities. The transparency obligations also extend on persons who are empowered to issue regulations or are entrusted with supervisory duties in the (re)insurance sector and encompass the procedures affecting their appointment and termination. Similar insurance supervisory systems are to be found in non-European countries, which apply rules on reporting of financial statements, quality of assets covering reserves, etc. or where codes of practice have to be adhered to when distributing insurance products. Other jurisdictions require that the exclusions of the coverage and points of importance for the interest of the insured shall be properly explained to the insured so as to make an informed decision while selecting the insurance product. Transparency rules are more or less to be found in all jurisdic- tions. There are differences from country to country as to the extent and degree of transparency and disclosure obligations. Transparency further aims at facilitating the cross-border business of (re)- insurance companies, as well as that of insurance intermediaries in the EU. Insurance intermediaries are called to disclose to the insurance applicant any direct or indirect participation which the insurance undertaking, which they propose, may have in their share capital and vice versa; they shall also disclose the manner in which they are remunerated. Notably, there is a tendency in a number of jurisdictions to introduce strict supervisory rules ensuring that the insured is informed as to how

v vi Foreword the insurance intermediary is remunerated. This exchange of information makes the intermediary's relations with the customer more transparent and reduces potential conflicts of interest. In effect, the transparency principle serves to make it unneces- sary that restrictive rules are introduced in order to prohibit certain business schemes and behaviours between insurance undertakings and intermediaries, which could prejudice the interests of the customer. This can be seen in the above example, where the transparency principle reinforces the duty to provide information to the applicant on the degree of the broker’s dependence on an insurance undertaking, instead of prohibiting such dependence. The EU has come a long way in infiltrating the principle of transparency in the insurance industry. This is the case in non-EU countries too, as the reader will find in the chapters contained in this book. This shows that the increasingly robust appli- cation of transparency rules is not just a local phenomenon, or a response to a periodical phenomenon, even a severe one such as a financial crisis. It is also a reaction to the ever-increasing complexity of the supervisory rules, of the composi- tion and structure of (re)insurance companies and of the complexity of their prod- ucts, which are a global evolution. The result is that the principle of transparency puts both supervisory authorities and customers in a better position to understand the insurance products offered, as well as the functions and the quality of the insurance undertakings and of intermediaries. Consequently, transparency serves as a tool to fight illegalities and pathologies. In addition, the supervisory control is facilitated, the customer is protected and the quality of services offered is improved, while at the same time the self-regulation of the market operators is observed and reinforced: the less they can operate obscurely, the more they will be prone to operating fairly and in compliance with regulatory requirements. This book consists of chapters which examine the transparency rules found in the insurance regulation and supervisory laws of several legal systems, ranging from civil to common law. It also encompasses useful overview chapters written by the editors. These chapters attribute to the book a genuine comparative element and an insight on how regulatory frameworks are shaped at a global context. They allow the reader to detect the common underlying principles and to identify the different approaches adopted in the studied jurisdictions. The authors are leaders in their respective fields, and all have strong links with the International Association of Insurance Law (AIDA). The two editors, Pierpaolo Marano and Kyriaki Noussia, are both highly respected academics in insurance law. The book is a valuable asset for any academic or professional insurance lawyer or organization. Academics, legal and insurance practitioners, researchers, regulators and law reform bodies will profit from the discussion, research and analysis contained in this volume.

Athens, Greece Ioannis Rokas July 2020 Preface

The role of transparency in insurance is overall important, i.e. not only in relation to the insurance contract law but also in relation to the insurance regulation and supervisory laws of each jurisdiction. In addition to being important, transparency in insurance regulation and supervisory laws is essential as the various regulatory and supervising authorities act as “gatekeepers” in ensuring the lawful operations of insurers to the benefit of the policyholders and of other insurance stakeholders. The current work is the second of two parts of an edited and comparative work, which is looking into the topic of transparency in insurance law and regulation in various common law and civil/continental law jurisdictions. This book, following from Volume I—whereby transparency in insurance contract law in the major common law and civil/continental law jurisdictions was discussed—describes, dis- cusses and critically analyses transparency in insurance regulation in the various common law and civil/continental law jurisdictions, in Europe and in the rest of the world. The jurisdictions selected form some of the major players worldwide in insurance law and in the insurance market. As with Volume I, it has been felt that identifying and critically discussing transparency in insurance regulation and super- visory laws of the countries examined would help better assess the contemporary challenges imposed in the various legal systems. The study and analysis have allowed us to conclude that while the European jurisdictions reflect different facets of the principle as emerging from EU law on insurance, the principle has developed quite differently in other jurisdictions. In Europe, the Solvency II Directive and the Insurance Distribution Directive (IDD) introduced harmonised rules across the European Union. The Solvency II and IDD Directives alongside with the national regulatory and supervisory laws in the EU Member States act as guarantee for the observance of transparency, as demon- strated by the analysis carried out in this book. The different harmonisation levels found in the protection level offered by the above Directives, i.e. at times maximum and at times minimum harmonisation levels, depict the differences in the transposi- tion of the principle of transparency in these Member States. In addition, the EU standards on transparency in insurance supervision act as a benchmark for national

vii viii Preface regulations. It follows that these standards help achieve the focal objective of insurance and reinsurance regulation and supervision at EU level, i.e. help the policyholders and beneficiaries to get adequate protection, and in effect their enact- ment is instrumental in achieving the goal of establishing a homogenous EU single market. In relation to transparency in insurance regulation and supervisory law of the countries outside the EU and Europe, i.e. countries grouped in this book under the heading “Rest of World”, it is observed that transparency is a much-needed principle and prerequisite in insurance regulation and supervisory law, where it helps the homogeneity of practices pertaining to the abidance of good faith. The framework of insurance regulation and its transparency issues in the national legal systems of Australia, Brazil, Chile, China, New Zealand, Peru, Russia, South Africa, Taiwan, Turkey and the USA allows us to conclude that, in the jurisdictions examined, such regulation exists in order to enhance transparency and promote financial soundness, good market conduct and to protect the interests of the insurer and of the policyholders. At the same time, it is notable that transparency should not lead to overregulation which might hinder the further development of the market. The final remark is that transparency in insurance regulation is important for consumers and insurers, and it is within this ambit that regulators should enhance the provision of the duty for transparency via the obligation of disclosure of information. Hence, it is apparent that in all jurisdictions transparency is not only important for consumers but also for insurers.

Milan, Italy Pierpaolo Marano Exeter, UK Kyriaki Noussia AIDA Europe

AIDA Europe was established in 2007 with the aim of promoting, either directly or through its members, the development of insurance and related laws. It attempts to achieve this, mainly through: • furtherance of the study and knowledge of international and national insurance law and of related matters; • proposition of measures aiming at the harmonization of insurance law or the means for resolution of insurance disputes; • facilitation of exchange of academic know-how between its members or any other European organization dealing with insurance-related matters, similar to those of AIDA Europe; • support of academic work in the field of insurance, e.g. through cooperation with universities or the sponsoring of academic research and papers. AIDA Europe organizes conferences mainly geared to the European-based juris- dictions, offering to all interested stakeholders a platform for an open- and solution- minded scientific- and practice-related dialogue on key developments in the area of insurance, reinsurance and related law also supporting its members in their respec- tive endeavours. Conferences are open to all stakeholders and regularly attract representatives from the insurance sector, academia, private practice, regulatory authorities or law-making bodies. AIDA Europe also maintains a keen focus on supporting the development of young academic talents by sponsoring academic work and by inviting young academics to its conferences. AIDA Europe’s Scientific Committee, which supports

ix x AIDA Europe

AIDA Europe through the scientific agenda setting, also manages AIDA Europe’s Calls for Papers. AIDA Europe is a non-profit organization, pursuing altruistic goals and has its seat in Zurich, Switzerland. Its events are open to all interested parties. For further information, please see https://aidainsurance.org/regional-groupings/aida-europe. Contents

Part I Transparency in European Jurisdictions Transparency in Insurance Intermediation and Regulation in Austria ...... 3 Sebastian Wöss Transparency in Insurance Regulation and Supervisory Law of Croatia ...... 19 Loris Belanić and Dionis Jurić Transparency in Insurance Regulation and Supervisory Law of Cyprus ...... 45 Michael Chatzipanagiotis Transparency in Insurance Regulation and Supervisory Law of England ...... 81 Kyriaki Noussia Transparency in Insurance Regulation and Supervisory Law of France ...... 95 Louise Bouvery Transparency in Insurance Regulation and Supervisory Law of Germany ...... 123 Kevin Bork and Manfred Wandt Transparency in Insurance Regulation and Supervisory Law of Italy ...... 159 Pierpaolo Marano and Michele Siri Transparency in Insurance Regulation and Supervisory Law of Malta ...... 185 Geoffrey Bezzina, Simon Grima, and Andre Farrugia

xi xii Contents

Transparency in Insurance Regulation and Supervisory Law of Poland ...... 213 Marta Ostrowska Transparency in Insurance Regulation and Supervisory Law of Portugal ...... 231 Margarida Lima Rego and Diogo Costa Seixas Transparency in Insurance Law and Regulation in Spain ...... 249 Rafael Lara Transparency in Insurance Regulation and Supervisory Law in Sweden ...... 269 Jessika van der Sluijs Transparency in Dutch Insurance Regulation and Financial Supervision ...... 291 Arthur van den Hurk A Comparative Analysis of Transparency in Insurance Regulation and Supervisory Law of Selected European Jurisdictions ...... 309 Pierpaolo Marano

Part II Transparency in Non-European Jurisdictions Transparency in Australian Insurance Law and Regulation: Regulation and Intermediaries ...... 323 Robin Bowley Insurance Law and Regulation: The Transparency of the Brazilian Superintendence of Private Insurance (SUSEP) ...... 359 Vitor Boaventura Xavier Transparency in the Chilean Insurance Law, Intermediation, and Supervisory ...... 387 Roberto Ríos Ossa Regulatory Requirements on Transparency of Insurance Contracts to the Insureds in China ...... 407 Zhen Jing Transparency in New Zealand Insurance Law ...... 433 Jonathan Scragg and Rob Merkin QC Transparency in Insurance Regulation in Peru ...... 443 Alonso Núñez del Prado Simons Transparency in Insurance Regulation and Supervisory Law of Russia ...... 473 Capitolina Tourbina Contents xiii

Transparency in Insurance Law and Regulation: In South Africa . . . . . 491 Birgit Kuschke and Daleen Millard Transparency of Insurance Regulation in Taiwan ...... 519 Chun-Yuan Chen Transparency in Insurance Regulation and Supervisory Law of Turkey ...... 533 Ecehan Yeşilova Aras Transparency in Insurance Regulation and Supervisory Law of the United States ...... 547 Robert H. Jerry II Comparative Analysis of Transparency in Insurance Regulation and Supervisory Law of the Countries Outside the EU and Europe (Rest of World) ...... 595 Kyriaki Noussia Transparency in the Insurance Core Principles ...... 605 Marta Ostrowska Abbreviations

AID Act of 15 December 2017 on insurance distribution AIRA Act of 11 September 2015 on insurance and reinsurance activity AML Anti money laundering AML/CFT Anti money laundering/combating of terrorism financing ASF Portuguese Insurance and Pension Funds Supervisory Authority Art Article CMLR Common Market Law Review CMVM Portuguese Securities Market Commission EBA European Banking Authority EIOPA European Insurance and Occupational Pensions Authority EIOPA Regulation Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (EIOPA) ELJ European Law Journal European Court of Human Rights ESMA European Securities and Markets Authority FAIS Act Financial Advisory and Intermediary Services Act FSA British Financial Services Authority FSB Financial Services Board FSCA Financial Services Control Authority GCC General Code of Conduct GTC Insurance general terms and conditions IAIS International Association of Insurance Supervisors IBIPs Insurance-based investment products IDD Insurance Distribution Directive IDD Directive Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 IMD Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002

xv xvi Abbreviations

IPID Insurance product information document J. Civ. L. Stud. Journal of Civil Law Studies J.I.B.L.R Journal of International Banking Law and Regulation KID Key information document LIRB Laws on insurance and reinsurance business and other related matters of 2016 to 2019 LOPF Law on occupational and pension funds of 2020 LTIA Long-term Insurance Act P Page PFSA Polish Financial Supervision Authority PICA Portuguese Insurance Contract Act as approved by Decree- Law 72/2008 of 16 April 2008 and amended by Law 147/ 2015 of 9 September 2015 PIDA Portuguese Insurance Distribution Act: Law 7/2019 of 16 January PISA Portuguese Insurance Supervision Act as approved by Law 147/2015 of 9 September 2015 PPR’S Policyholder Protection Rules PRIIPs Packaged retail and insurance-based investment products PRIIPs Regulation Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 Solvency II Directive Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009, as amended by Directive 2011/89/EU of the European Parliament and of the Council of 16 November 2011, Directive 2012/23/EU of the European Parliament and of the Council of 12 September 2012, Directive 2013/23/EU of the Council of 13 May 2013, Directive 2013/58/EU of the European Parliament and of the Council of 11 December 2013, and Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014, Directive 2016/2341 of the European Parliament and of the Council of 14 December 2016, Regulation 2017/2402 of the European Parliament and of the Council of 12 December 2017 and Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 STIA Short-term Insurance Act Tul L. Rev. Tulane Law Review